Did Steve Jobs Actually Intend For Apple to Live Forever?

by Brian S Hall   |   March 18th, 2013

Steve leaves behind a company that only he could have built, and his spirit will forever be the foundation of Apple.
– Apple Inc statement upon news of the death of Steve Jobs

What if more than Steve Jobs’ spirit lives forever? What if Apple lives forever? Is this even possible?

I say yes.

As the blogosphere pronounces ‘Apple is Doomed’ at every turn, I can’t help but thinking that we have it wrong. Apple will have its ups and downs, no doubt. It’s just that the more I follow Apple, the more I study Steve Jobs, the more I suspect that while he could not live forever Jobs absolutely believed his creation, Apple, could. Literally.

These are my clues:

Apple University

As the LA Times noted shortly after his death, “Apple University” was a serious focus of the seriously focused Jobs. Think what you will of him personally, but Jobs believed in the rightness of his vision. Apple University was created to inculcate his innumerable qualities in those who would come to run Apple years and decades into the future.

To survive its late founder, Apple and Steve Jobs planned a training program in which company executives will be taught to think like him, in ‘a forum to impart that DNA to future generations.’ Key to this effort is Joel Podolny, former Yale Business School dean.

According to a former Apple executive, speaking anonymously: “No other company has a university charged with probing so deeply into the roots of what makes the company so successful.” Training at Apple University reportedly focuses on what enables a company to create sustained innovation.

If there is one key to serious longevity, it is that: sustained innovation.

Apple Endowment

Jobs was audacious. To enable Apple to live forever, he needed money. Lots of money. Apple has that. Forget about stock buybacks, or Wall Street howls for dividends. Ignore the idea that Jobs and Apple are hoarding cash for acquisitions – keeping their “powder dry” as it were. The nearly hundred fifty billion Apple has amassed has a higher purpose: an Apple endowment.

I believe that Jobs, had he lived longer, would have worked diligently with two groups he no doubt found tiring, Wall Street and Washington, to change the laws so that a substantial portion of Apple’s already substantial cash reserves could be used for an endowment.

Growing up in the area, Jobs no doubt knew of the founding of nearby Stanford University. Via Wikipedia:

With his wife Jane, Stanford founded Leland Stanford Junior University as a memorial for their only child, Leland Stanford, Jr., who died as a teenager of typhoid fever. The Stanfords donated approximately US$40 million (over US$1 billion in 2010 dollars) to develop the university, which held its opening exercises October 1, 1891.

One billion is nice. One hundred billion is better. Harvard’s endowment, for example, the richest of all, is approximately $30 billion. What if Jobs – and he would have made Tim Cook aware of this, I suspect – wanted to have, say, $60 billion of Apple’s money set aside as an endowment?

At $60 billion, if the investment manager of the “Apple Endowment” earned 6.5% a year returns on average, that would deliver approximately $4 billion every year, forever. Apple currently spends about $4 billion a year on R&D. Imagine: Apple research and development funded in perpetuity. Think what the company could achieve ten years from now, a hundred, a thousand. If the future Apple made only enough to pay for its operating expenses, it could still churn out amazing products for your great great great grandchildren.

Business Model Purity

Beyond the money, of course, the more I study Apple the more I admire Jobs’ vision to ensure the durability – the permanence – of Apple. There is a purity to Apple’s business model that is, ironically, so rare in Silicon Valley. Google and Facebook encourage our use of their services, for free, then sell our data to others. Who is the customer? HP, for example, lives off exorbitant printer ink costs. Believe it or not, that is not a sustainable business.

Apple, by contrast, builds great products and prices them accordingly. No tricks, no inducements. Buy them or not. You always know what you are buying, and for how much, and what you are getting for the money. A hundred years from now, for example, I suspect there will be a littany of new business models, some great, some doomed to fail, some beyond our comprehension. Apple’s, however, I am sure will still thrive long after we are all gone.

Saying No

What does HP do anymore? Who are they? What about Cisco? Are they out of the consumer market or back in? Why is there a Google+ and a Google X Phone and a Google Car? There is creation, and then there is creation that moves you forward, sustains you. Jobs was famous for keeping Apple not focused on building great products, but on great products that mattered.

Yes, some of the stuff we never see would no doubt be cool. Yes, some of the top talent — the A players — are more likely to stay at Apple if they have a skunkworks to play in, like Google’s X Labs. Ultimately, however, such activities diminish focus, which alters who you are. No point in living forever if it’s not really you.

Jobs’ words on focus from 1997 still ring true today – and probably will for decades, at least:

People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things.

Control

If you follow Apple and/or Steve Jobs, you doubtless know the importance of control: control of core technologies, control of your product development, control of your distribution, control of your brand. So much of Jobs’ control efforts flew directly in the face of accepted wisdom and practice in Silicon Valley: open, sharing, licensing. Jobs would have none of it. He wanted Apple fully in control of its technologies – and its future.

Retail

Apple is (now) lauded for Apple Stores. You may already know they bring in more money per square foot than any other retail chain on the planet. They also ensure that Apple can offer its products directly to customers. Apple, rare in its industry, is not dependent on others for marketing and sales. But I wonder now if there’s an ever greater, longer-lasting benefit to its stores.

Retail is changing, profoundly. Online, mobile, the sharing economy, 3D printing, same-day shipping. With its many stores, Apple are learning, in real-time, not only what their millions of customers think about their latest products, but by being on the front-lines of buying and selling, Apple is learning the future of retail: the integration of real-time, social, online, digital and physical. Not even Amazon possesses this alchemy. Apple Stores should enable Apple to meet the demands of a changing world long into the future.

Here’s To The Crazy Ones

I think of this story from Business Week shortly after Jobs’ passing:

On the day Jobs died, employees numbly walked outside to watch an American flag lowered to half-mast—and then returned to work. Partners who were in town to meet with the company were astonished to learn that appointments would take place as scheduled. “That’s what Steve would have wanted,” an Apple manager explained.

Yes, that’s the way Jobs would have wanted it. He also would want Apple to continue building amazing, magical, revolutionary products in the year 2525. It could happen. It’s crazy, I know, but it’s those crazy ideas that change the world.

Brian S Hall

Brian S Hall writes about technology and change. His work has appeared in Techpinions, ReadWrite, the Wall Street Journal, LinkedIn, The Push, CIO and Business Insider. His latest novel, "Love in the Time of Caller ID" is available from Amazon and on iBooks.
  • steve_wildstrom

    Wow, that’s an interesting idea. Of course, as you hint, current tax laws are a considerable impediment to pulling it off. For one thing, a lot of Apple’s cash is stashed overseas and would take a substantial tax hit when repatriated. I don’t think there is any provision in law for endowments for taxable corporations and just how you would create one raises a host of questions–which is not to say they aren’t worth considering.

    The assumption of a 6.5% return does seem optimistic (if you know how I can get 6.5% consistent with the reasonable capital-preservation risk profile an endowment should follow, I’m all ears.) And that would be a pretax return; unlike a university or other 501(c)(3), Apple would be taxed on endowment earnings.

    • http://www.brianshall.com/ Brian S Hall

      I think over the long-run, 6.5% isn’t too rough — I examined big university endowments and it’s do-able. The tax issue, however, I totally steered clear of;-)

  • jfutral

    Considering 501c3s can have for profit subdivisions or subsidiaries or whatever the proper term, I imagine it wouldn’t take much to turn Apple R&D into a 501c3 to allow for an endowment. It would have to have its own board of directors and they could not receive any compensation or income from being on the board. The structure gets tricky, but not undoable. But I’m no tax lawyer so I couldn’t tell you exactly how it could be done or if it actually can work the other way around. I’m just someone who does a lot of work in a 501c3 industry.

    Joe

    • steve_wildstrom

      There is structure, including the Unrelated Business Income Tax, for tax-exempt entities to operate for-profit businesses. But it doesn’t seem to work the other way (except for corporate-sponsored charitable foundations, which I don’t think could apply here.)

      The problem I see is that creating a means to set up this sort of endowment could create a huge new loophole in the corporate income tax, which already consists mostly of loopholes. And corporate research is already highly tax-favored. This would be a very tough sell politically.

    • http://www.brianshall.com/ Brian S Hall

      Think of all the amazing stuff that came out of the old Bell Labs…

      • steve_wildstrom

        I have looked very hard at Bell Labs (preliminary research for a book.) Its circumstances in its heyday were unique: It was sheltered under the wing of a monopoly with a regulated rate of return. But it was very much part of the commercial AT&T enterprise. I have been surprised to learn how closely even the most theoretical math research–Claude Shannon on communications theory, Richard Hamming on coding theory, Ron Graham on computational complexity–was ties to Bell business. (The leading exception, Penzias and Wilson’s Nobel-winning work on cosmic background radiation, grew out of messing with a leftover satellite antenna during what Google would call 20% time.)

        It would have been nice is the old AT&T could have endowed Bell Labs, something I don’t think regulators would ever have allowed. Then is could have avoided the long decline and effective dissolution that followed the breakup of the Bell System and the spin-out of Lucent.

        • bfl

          regarding cosmic background radiation, i don’t think that was a spare time thing, but rather an investigation into some unexplained channel noise.

          • steve_wildstrom

            Penzias and Wilson had been given the use of a surplus huge microwave horn antenna at Holmdale. The cosmic background radiation discovery arose from their inability to eliminate thermal noise in the receiver. The story is beautifully told in Peter Bernstein’s “Three Degrees Above Zero.”

          • steve_wildstrom

            Correction: The author is Jeremy Bernstein. (I thought it was Jeremy, but I made the mistake of checking and Amazon, for some bizarre reason, lists the author as Peter. Should have gone to my bookshelf to check instead. Don’t believe everything you read on the internet.

  • stevesup

    I have long thought of Apple as a nonprofit, even when it was. (Little joke there.) Peter Drucker was the guru of nonprofits, which he viewed as a creative force unique to the US. Drucker: [The nonproft's] “product” is neither a pair of shoes nor an effective regulation. Its product is a changed human being. The non-profit institutions are human-change agents. Their “product” is a cured patient, a child that learns, a young man or woman grown into a self-respecting adult; a changed human life altogether.”

    Jobs channeled Drucker with his “dent in the universe.” And with his fidelity to the original mission of computers for the rest of us. Today I’d update it just a tad: “the best for the rest of us.” Apple is still a computer company at heart, still kicking down walls to market computers most folks can use. Playful and powerful both. Doing simply and well what ninety percent of folks use computers for ninety percent of the time. Hidden in sleek little containers, iPods, iPhones, iPads. Google is about destruction; Apple is about change “that matters.”

  • Dmitri

    This is a seriously excellent article. Thanks, Brian. Steve was a true visionary, this all makes sense.

  • tailhook

    Its that same Jobs vision that nearly bankrupted the company.. twice. Trust me when I say its likely it’ll happen a third time. Right now, the base of Apple(the mobile devices) is in the process of being eaten alive from all sides, and its not a good thing to have moved your entire chit into the mobile arena, a place with very few barriers to entry. Few barriers to entry means one thing, massive competition.

    You think it really matters what tablet is being used if you’re making a business tablet application? What software? The answer is no. They all have roughly the same functionality. The software is simple to port, no matter the system. Hardware is plentiful and easy to build. What that means is major competition that will simply blow up that premium profit margin Apple so enjoys. And if you’re a company looking to deploy lots of tablets, you simply play one manufacturer against the other until you get the best price.

    Maybe the watch will be a Savior. I don’t know. Maybe the TV will do it. I don’t know. But always chasing jackpot products is a dangerous game to play without a stable stream of revenue. Microsoft can piss away $10 billion dollars(or however much) scattershotting R&D to get to a mobile strategy(Surface Pro), because they have the full backing of the Windows Empire to do it with. Samsung can do the same thing from the mobile end because they have the Samsung Empire of Everything You Can Imagine that they sell. Google makes their money from advertising and search, its all a hobby to them.

    If the profit margins on the phones and tablets go away, and the profits on Watches or TV’s don’t materialize, Apple will quickly strangle itself(no matter how much money it has saved up) while they try to find something they can sell without steady revenue to support them. Nobody bats a thousand, even on jackpot products, and Apple is no exception to that.

    • http://www.brianshall.com/ Brian S Hall

      We should all have Apple’s problems.

    • JDSoCal

      Are you high? Who the hell do you think caused this massive disruption to mobile? It’s like telling Henry Ford in the 1920′s he’d better look out for automobiles.

      The only other handset maker making any money is Samsung (so much for your barrier to entry is easy theory). So Apple has one competitor. One which makes half Apple’s margins. Frankly, I’d be worried about a company that had no real competitors to keep them honest (i.e., Microsoft in the 90′s, Intel before AMD).

    • Space Gorilla

      “the base of Apple(the mobile devices) is in the process of being eaten alive from all sides”. Looks like somebody has been reading the Wall Street Journal. The actual truth is that Apple’s customer base is still growing, rapidly, and there’s no sign of it slowing down. All the articles you’ve been reading about Apple being doomed, those are disconnected from reality. Seriously, you can look up the numbers for yourself from many credible sources. You are absolutely wrong, Apple’s base is growing, and growing, and growing.

    • LTMP

      I can only think of one time that Apple was nearly bankrupt. That happened after Jobs was fired. If there was a second time, please share it with us.

      Since his return, the company did nothing but grow its earnings.

      Even now, with the stock price at its current extreme low, Apple has just come out of a record quarter for both revenue and profit.

  • http://www.runawaydaily.com/ Floyd Earl Smith

    You’ve got to be kidding me. Ever hear of Ozymandias – “Look on my works, ye mighty, and despair!”? Steve was great, but his last big decision was not to follow the treatment his doctors recommended for his cancer, and that didn’t work out at all.

    Jobs’ company is no more likely to be immortal than the man himself. Actually, it’s less likely, because it was so much the product of, and so dependent on, him and his vision.

    Microsoft was much more built to last than Apple, with better succession planning and a less “hits”-oriented business – and their market cap flatlined since shortly after Gates stepped aside. The same, or more so, is almost certain to happen with Apple.

    • stevesup

      Chill. Ballmer as succession planning? There’s a concept.